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The major U.S. stock indexes finished lower on Wednesday, reversing a sharp rally, fueled by the initial reaction to the Fed minutes released at 1900 GMT on Wednesday. The catalyst for the sell-off into the close was a surge in interest rates to fresh multiyear highs in a delayed reaction to the Fed minutes.

Shortly after the release of the Fed minutes, the S&P 500 and NASDAQ rose more than 1 percent. The Dow was up as much as 303.24 points.

Stocks initially rallied because the Fed minutes failed to reveal anything investors didn’t already know. The minutes showed the central bank sees increased economic growth and an uptick in inflation as justification to continue to raise interest rates gradually. The central bank said it believes inflation can reach its 2 percent target, but does not think inflation is getting out of hand. This news was already priced into the market.

Shortly after the initial spike to the upside, sellers came in to aggressively drive prices lower. They were largely influenced by rising Treasury yields. At first, Treasury yields and the U.S. Dollar whipsawed following the news. The benchmark 10-year note yield initially fell from session highs after the release, but recovered to reach a fresh four-year high above 2.95 percent.

Daily March E-mini S&P 500 Index

Forecast

Based on the price surge shortly after the release of the minutes, it looked as if investors were initially fooled into thinking the Fed minutes were dovish. It wasn’t just stock investors, either. Treasury investors as well as Forex traders were duped into thinking the minutes were dovish.

This assessment seems to have changed once investors realized the minutes were old news since economic and market conditions had changed since the January 30 – 31 meeting. Remember that since the meeting, the jobs reports had showed a jump in wages and consumer inflation had come in higher than expected.

Additionally, interest rates spiked high enough to trigger a steep break in the equity markets.

Wednesday’s price action in the indexes and the downside momentum into the close are strong indications that sellers may be taking control of the markets again.

Daily March E-mini NASDAQ-100 Index

The short-term target for the March E-mini S&P 500 Index is 2641.75 to 2615.25. The March E-mini Dow Jones Industrial Average futures contract could reach 24256 to 23980 and the March E-mini NASDAQ-100 Index has an initial downside target of 6524.75 to 6439.50.